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Microinsurance and household asset welfare in South Africa


This paper examines the effect of microinsurance usage on household asset welfare, measured as asset accumulation index using a sample of 2006 households with access to formal non-banking and informal financial services from the 2015 FinScope Survey. Using the treatment effect and instrumental variable estimation techniques to account for endogeneity and selection biases, the empirical results support the hypothesis that microinsurance provides financial protection through asset accumulation to improve welfare. The findings are robust for different types of microinsurance products and weighted and unweighted asset accumulation indices. The policy implications of the findings are discussed.

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  1. 1.

    Refer to Booysen et al. (2008) for a detailed discussion on the use of the MCA for the weights.

  2. 2.

    Most funeral insurance providers have a waiting period (between 3–6 months), except in the case of accidental death, and claims are usually verified by obtaining extensive documentation.

  3. 3.

    The results of the correlation analysis (omitted to save space but available from the authors upon request) indicate that the estimates do not suffer from multicollinearity bias using the 0.70 threshold of Kennedy (2008).

  4. 4.

    Without education, the usage of financial services becomes transactional (for consumption) rather than for financial protection and wealth creation (Lusardi and Mitchell 2014).


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The authors are very grateful for the constructive comments of two anonymous reviewers, which substantially improved the initial draft of the paper. All caveats apply.

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Correspondence to Abdul Latif Alhassan.

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Table 8 Descriptive statistics
Table 9 Outcome results – microinsurance and asset welfare (equal weighting asset index)

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Alhassan, A.L., Magazi, N. Microinsurance and household asset welfare in South Africa. Geneva Pap Risk Insur Issues Pract 46, 358–382 (2021).

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  • Microinsurance
  • Asset welfare
  • Asset index
  • South Africa